And by extension, do you not invest in what you don’t believe in? It’s an interesting question, and one many people when beginning to invest money.

It has often been said that confusing fundamentals with morals is not the way to go when considering investing in a particular stock, but I personally find it difficult to separate the two.

Take for instance the high-yielding tobacco industry. There are a couple stocks in the sector yielding around 5%, significantly more than interest rates on deposit accounts. They are relatively stable companies with good growth history.

However, I choose not to invest in this area through single stocks because I don’t believe in the company and its mission. I’ve lost a few close relatives to lung cancer, and I fail to see how the production of cigarettes helps the world.

Many people have similar feelings about gambling, genetically modified food, oil companies and other sectors where the mission of the company does not necessarily line up with your moral values.

The flip side of the argument, however, is that by eliminating certain sectors, you may be eliminating good stocks – stocks that provide an opportunity to grow your wealth.

It’s an interesting dilemma for many. And consider that we are only discussing single stocks for purposes of this discussion. Consider many mutual fund investors probably hold stocks in companies they don’t agree with through their mutual fund holdings (unless they have invested in a branded socially responsible fund).

As a beginning investor myself, I recognize that to build serious wealth you have to maintain a level of objectivity necessary to capitalize on opportunities where they exist.

However, I’m also human, and I have a strong set of moral beliefs. I’d rather be a little less wealthy with my morals in tact than filthy rich with a conscious that won’t allow me to fall asleep at night.

1 COMMENT

  1. I’m glad to see you covered socially responsible investing.

    Surveys all-over-the-world show that most investors want to invest in socially responsible companies and don’t want their investments being the cause of grief to others. Then since so many of our core values are alike — and are supportive of higher ideals — that in the long run, only companies employing these higher values will likely prosper.

    I’ve been following socially responsible investing for some forty years.

    In 2003, I founded a site to educate investors about ethical/socially responsible investing. It’s now one of the foremost global sites on this topic.

    It covers the latest related global news, research, books, links, articles, etc., and according to Google rankings is one of the world’s most popular on this subject. It’s at http://investingforthesoul.com/

    Best wishes, Ron

Leave a Reply